Thursday, February 24, 2011

KANSAS CITY, MO (KCUR) - A proposal to eliminate Missouri's income tax has captured the fancy of a House committee in Jefferson City. But a budget watchdog group says it would be a risky move, and costly to most Missourians.

The proposal aims to eliminate income tax and replace it with a simple sales tax of 7 percent, not quite twice the present rate. But Amy Blouin of the Missouri Budget Project is concerned that a House committee has endorsed a constitutional amendment to do that.

She says it would take a 12 percent sales tax to maintain state services, even if the tax extends to services including medical care. And it would reduce total taxes paid only for the wealthiest 5 percent.

"95 percent of Missourians would pay more," Blouin says. "We could have severe cuts to education, health care and other services."

Blouin contends that the proposed sales tax is not like the present Missouri sales tax because it applies to services as well as to goods.

“The truth is that this is unlike any sales tax that has ever existed in any state. No state subjects all services to the sales tax like Missouri would under this proposal," Blouin said.

The proposals allow the legislature to exempt some services, but those services are not specified. Blouin says if passed the new sales tax could apply to medical and child care services.

Since it's framed as a constitutional amendment, the proposal would have to be passed by the legislature and be approved by Missouri voters. Petitions for a very similar voter initiative version are also being circulated, reportedly backed by St. Louis millionaire Rex Sinquefield.